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Becoming a digital business

Can partnering drive business and IT transformation?

Partnering is growing, it’s critical, yet it often fails

According to the Harvard Business Review article ‘Simple Rules for Making Alliances Work’i , the number of corporate alliances is growing by 25% a year. Partnering is critical to success with 30% of revenue, in some industries, coming through ecosystems. Yet the partnership failure rate hovers between 60% and 70%. In this article, we explore why partnering is so important in the digital world and how to get it right.

The digital world calls for a new approach to partnering

There isn’t a company today that doesn’t realise that the digital world has the potential to fundamentally disrupt their business. They’re all trying to deal with their version of digital transformation.

Change is happening much faster than before, so they need to be far more agile and flexible. In this environment speed to market is everything – much more important than doing everything perfectly in house, even if you could.

Developing digital capabilities yourself is slower than partnering. If you try to build every capability you need yourself, by the time you’ve built them, the market will have passed you by. Partnering gets you to market faster. That’s why it’s become orders-of-magnitude more important in the digital world.

Partnering gets you to market faster.

The companies that succeed at digital transformation are the ones who have a well-structured approach to partnering and ecosystems. They take partnering seriously, see it as mission critical, and integrate closely with their partners, because they know their success depends on good partnering.

Be prepared to work with new kinds of partners

At Dimension Data we partner with companies we also compete with. Our partners may go to market directly not just through us, target the same clients as we do, or have a services strategy that competes with our own.

We’ve learnt the importance of working with anyone who can accelerate our execution. The trick is to focus on why you’re doing it, embrace where you’re complementary, and don’t worry about where you compete.

Partnerships fail when you concentrate on the overlaps and points of competition – this just undermines trust, worsens culture, and you fail to execute. They succeed when you share a common strategic vision, have a clearly defined partnering framework, can articulate your joint value proposition, and focus on where you complement each other.

One of our partners in the education sector, GÉANT, is also seeing co-operation increasing between organisations that might otherwise be considered competitors. Karl Meyer gave us this insight.

‘The GÉANT project is Europe’s leading collaboration in the research and education sector. It provides networking, IT infrastructure, and IT services to 40 National Research and Education Networks (NRENs), whose members are research and educational institutions across Europe. Together the partnership serves 10,000 universities with a total of 50 million end users.

‘The whole organisation is a very close kind of partnership. Of GÉANT’s 450 full-time equivalent workforce, only 150 are actually employed by GÉANT itself – the rest work for the NRENs or other partners.

‘GÉANT have multiple competing cloud providers in their ecosystem. Microsoft, AWS, Google, and Dimension Data all find a place because they offer different kinds of cloud services. The hyperscale public cloud providers offer generic services with a self-service interface, while Dimension Data offers a hybrid cloud platform with specialist regulatory accreditations as a managed service.’

Success lies in integration

The success of a partnership depends on how closely the partners are integrated – and conversely one of the main reasons partnerships fail is because they’re not integrated enough.

Thankfully, technology now makes closer integration easier. These days our respective systems are built increasingly on programmable infrastructure, with standard API interfaces. This makes it much easier to integrate them.

The ISO standard on partnering best practice ‘BS ISO 44001: Collaborative business relationship management’ goes as far as recommending full integration of front-end and back-end systems and supply chains. This approach is worth it in some industries. We don’t go that far, though we are closely integrated at the process, platform, and technology levels.

GÉANT however are a great example of this kind of vertical integration, Karl explains. ‘GÉANT can be seen to be like the manufacturer/wholesaler; with NRENs acting like value-added distributors of GÉANT’s services alongside their own services; the institutions are the closest equivalent to customers; and the students and researchers are the end users. It’s complex and unique but it works!

‘The primary relationship at the core of the partnership is between the NRENs and their member institutions. GÉANT see themselves as the “enabler” of this relationship, “facilitating” the NRENs to provide services to their members – this is the language we use. The ethos is service led not profit led.’

Strategic and cultural fit are critical

Successful partnerships require three kinds of fit: strategic fit, operational fit, and cultural fit. Generally, when partnerships fail it’s because not enough attention is given to strategic and cultural fit.

Operational fit usually gets most focus, because it’s home ground to most of us. We’re all used to doing business plans and so on.

Often, not enough time is spent on the strategic fit: What is your joint strategic vision? What are you both trying to achieve? Why would the two of you working together deliver a better outcome for your respective businesses and for your shared clients?

Cultural fit is about building an ethos of trust and teamwork. It’s about the quality of the relationships between the two organisations, and alignment around values. Managing cultural fit requires a formal governance framework.

Karl says this is true at GÉANT too. ‘We look for a partnership approach from our commercial suppliers as well. We work with service providers that understand the special nature of the research and education community and have an organisational culture that will fit with GÉANT’s service ethos. We work together realistically with our suppliers, accepting that they have to make a profit.

‘By adopting this visionary yet realistic approach to partnering, GÉANT’s members get exactly what they need much cheaper than they could buy it on their own, the technology all works together automatically, and the members don’t have to worry about procurement or service management.’

What to do less of and what to do more of

Do less of defining the right business relationship and do more of defining the right working relationship. Focus less on measuring the end, and more on measuring the means. Forget about eliminating differences and embrace them instead.

Don’t worry too much about establishing formal alliance management systems and put more emphasis on encouraging collaborative behaviour. Stop obsessing about managing the other party and focus on managing your own stakeholders instead.

Know your partners well, trust each other. Don’t keep hidden agendas. Be prepared to admit where you’ve gone wrong. Don’t look to the other party, look to yourselves first. Work jointly on solutions and driving the shared strategic vision. That’s when partnering works.

Our top 3 pieces of advice for successful partnerships

Partnering in all its forms is definitely a core competency for a digital business. It needs to be treated as mission critical and done through a formalised, holistic process: